Results Presentation 3Q 2013 28 October 2013 1Q
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Contents 1. 3Q 2013 highlights 2. 3Q 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions Annex: BFA Group data 3 of 28 / October 2013
3Q 2013 highlights 1 High degree of progress in branch closures and workforce adjustment RESTRUCTURING PLAN Over € 1,900 million in cash generated by sale of non-strategic assets 2 Increased productivity in the branch network BUSINESS ACTIVITY Good performance of the business in the restructured network New business model 3 Continued growth in net interest income and pre-provision profit Efficiency ratio improvement FINANCIAL Stabilised cost of risk PERFORMANCE Significant strengthening of liquidity and solvency Net profit in line with estimates 4 of 28 / October 2013
3Q 2013 highlights 1 Restructuring plan BRANCH NETWORK RESTRUCTURING AND CAPACITY ADJUSTMENT As of today 29.7% of the branches existing at BRANCH CLOSURES the end of 2012 have been closed. Restructured network at 30 September 2013 ESTIMATED CLOSURES (PLAN) 1,143 accounts for 88% of deposits and 87% of gross income generated in the branch CLOSURES COMPLETED TO DATE 929 network. Workforce has been reduced by 19.6% year % OF TARGET 81% to date (4,019 employees) Network restructuring to be completed in Q1 2014, ahead of Strategic Plan schedule 5 of 28 / October 2013
3Q 2013 highlights 2 Business activity PRODUCTIVITY AND EFFICIENCY STRICT DEPOSITS BY BRANCH ( € m) GROSS LENDING BY BRANCH ( € m) 58.9 40.0 26.4% 31.1% 46.6 30.5 Dec 2012 Sep 2013 Dec 2012 Sep 2013 EFFICIENCY RATIO (1) OPERATING EXPENSES/ATAs 63.3% - 9.1% 0.78% 54.2% - 8 bps pts. 0.70% 4Q 2012 3Q 2013 4Q 2012 3Q 2013 (1) Cost-to-income ratio excluding trading income and exchange differences More productive and efficient organisational structure: 81% of the branches remaining after the restructuring are more than 15 years old 6 of 28 / October 2013
3Q 2013 highlights 2 Business activity NEW MODELS OF SUPPORT OFFICES FOR THE BRANCH NETWORK Transactional Centres “ Oficinas Ágiles ” Recovery and Liquidation Centres (CLRs) A total of 28 Recovery and Liquidation Segmentation of the network and Centres (CLRs) will be in place in the opening of a new branch model. areas with lower presence (non-natural territories). Intense activity in monitoring and recovery of High frequency transactions NPLs Referral of high-value customers to the Sale of basic products (credit cards, term appropriate branches deposits, etc.) Settlement activities Extended opening hours … ALLOWING GREATER BUSINESS FOCUS IN THE BRANCHES 7 of 28 / October 2013
3Q 2013 highlights 3 Financial performance Profit before tax in the 3Q amount € 229 million . Total pro forma accumulated to September 2013: € 633 million . Results Net interest income increases for the second consecutive quarter, to € 643 million , and at the same time expenses reduce by 5%. Reduction of NPLs for the third consecutive quarter in a cumulative amount of around € 800 million in the first nine months of the year . Asset quality Coverage ratios are maintained on loan portfolios at 8.5% of the total portfolio and 62.6% of NPLs. Reduction of the commercial gap continues and the LTD ratio improves to 116.7% . Liquidity and solvency Bankia again increases its capital ratio, by 74 bp in the quarter, reaching EBA Core Tier I of 11.06% . 8 of 28 / October 2013
3Q 2013 highlights 3 Financial performance DIVESTMENT PLAN CASH GENERATED FROM COMPLETED SALES OF CASH GENERATED FROM SALES OF INVESTEES INVESTEES PENDING APPROVAL 1,133 715 779 ESTIMATED LIQUIDITY Others More than 70 sales and liquidations completed by the end of 3Q 2013 To 30 June To 30 Sept More than € 1,900 million of cash generated from sale of investees 9 of 28 / October 2013 Amounts in € million
Contents 1. 3Q 2013 highlights 2. 3Q 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions Annex: BFA Group data 10 of 28 / October 2013
3Q 2013 results Bankia Pro Forma Income Statement 1Q / 2Q / 3Q 2013 – Key figures The following pro forma income statement excludes the cost of the subordinated loan by BFA to Bankia, in the amount of € 89m in 1Q and € 53m in 2Q, which was cancelled on 23 May. In 2Q and 3Q 2013, profit from discontinued operations in amounts of € 113 mill. and € 21 mill., respectively, is included in profit from sale of investees and other profit. 2Q 2013 3Q 2013 1Q 2013 Net interest income 601 633 643 A Gross Income 958 945 957 B Operating Expenses (488) (464) C (494) Pre-provision profit 470 481 D 463 Addition to provisions (585) (294) (272) E Profit from sale of investees and other 328 42 0 profit Profit before tax 213 229 191 Bankia Group data. € m 11 of 28 / October 2013
3Q 2013 results A Net interest and fee income – Bankia Growth in Net Interest Income Positive fee performance 762 (1) 731 (1) 18 643 633 (1) 91 242 601 (1) 237 53 226 225 225 89 3Q12 4Q12 1Q13 2Q13 3Q13 3Q13 3Q12 4Q12 1Q13 2TQ3 (1) Actual numbers, adjusted for the finance cost associated with the subordinated loan from BFA to Bankia, which was cancelled on 23 May. Change in net interest income trend initiated in 1Q 2013 is confirmed. Reduction in customer deposits cost Fees improvement vs. two prior quarters. Bankia Group data. € m 12 of 28 / October 2013
3Q 2013 results B Gross income – Bankia Composition and trend of Gross Income (1) (1) Gross Income 957 958 945 Other (2) 131 100 65 93% of Gross +2.6% +3.9% Income is 237 225 generated by the 225 Fees primary business 643 633 601 Net interest income 1Q 13 2Q 13 3Q 13 (1) Actual figures, adjusted for the finance cost associated with the subordinated loan from BFA to Bankia, which was cancelled after the Bankia capital increase (2) Trading income + Exch. Diff. + Dividends + Equity method + Other operating income The stability of gross income is maintained by the improvement in the primary banking business Bankia Group data. € m 13 of 28 / October 2013
3Q 2013 results C Operating expenses – Bankia Quarterly trend in operating expenses Operating expenses/ Gross income (ex tr. income) -17.1% 63.3% 62.1% 62.1% 560 553 -4,9% 60.1% 494 488 464 54.2% 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 (1) Cost-to-income ratio excluding trading income and exchange differences Reduction of expenses by 5% from the previous quarter Bankia Group data. € m 14 of 28 / October 2013
3Q 2013 results D Pre-provision profit – Bankia +48.5% 481 (1) 470 (1) 463 (1) 351 53 89 (1) 324 91 18 481 417 374 306 260 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 0.23% 0.34% 0.46% 0.48% 0.52% PRE-PROVISION PROFIT / RWAs RATIO Fourth consecutive quarter of increased pre-provision profit (1) Actual figures, adjusted for the finance cost associated with the subordinated loan from BFA to Bankia, which was cancelled after the Bankia capital increase Bankia Group data. € m 15 of 28 / October 2013
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